[Federal Register Volume 89, Number 67 (Friday, April 5, 2024)]
[Notices]
[Pages 24057-24059]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-07222]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99874; File No. SR-NYSECHX-2024-14]


Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
Rule 7.8A and Article 9, Rule 7

April 1, 2024.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on March 25, 2024, the NYSE Chicago, Inc. (``NYSE Chicago'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Rule 7.8A (Cross Order Settlement 
Terms) and Article 9, Rule 7 (Transactions ``Ex-Dividend'' and ``Ex-
Warrants'') to conform to amendments to Rule 15c6-1(a) of the Act to 
shorten the standard settlement cycle for most broker-dealer 
transactions from two business days after the trade date (``T+2'') to 
one business day after the trade date (``T+1''). The proposed rule 
change is available on the Exchange's website at www.nyse.com, at the 
principal office of the Exchange, and at the Commission's Public 
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On March 6, 2023, the Commission adopted amendments to Rule 15c6-
1(a) of the Act to shorten the standard settlement cycle for most 
broker-dealer transactions from T+2 to T+1.\3\ Accordingly, the 
Exchange proposes to amend Rule 7.8A and Article 9, Rule 7 to conform 
with the amendments to Rule 15c6-1(a) and reflect a standard settlement 
cycle of T+1.
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    \3\ See Securities Exchange Act Release No. 96930, 88 FR 13872 
(March 6, 2023) (``T+1 Adopting Release'').
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    Rule 7.8A currently provides that Cross Orders settle ``regular 
way'' unless designated with one of two ``non-regular way'' settlement 
terms: Cash or Next Day. A Cross Order designated for ``non-regular 
way'' settlement may execute at any price without regard to the PBBO or 
any orders on the Exchange Book. Rule 7.8A defines ``Cash'' settlement 
as a transaction for delivery on the day of the contract and ``Next 
Day'' settlement as a transaction for delivery on the next business day 
following the day of the contract.
    Article 9, Rule 7(a) currently provides that transactions in stocks 
are ex-dividend or ex-rights on the business day immediately preceding 
the date of record fixed by the corporation for the determination of 
stockholders entitled to receive such dividends or rights, with certain 
exceptions. First, as provided in Rule 7(a)(1), when the record date 
occurs on a holiday or half-holiday, transactions in the stock will be 
ex-dividend or ex-rights two full business days immediately preceding 
the record date. Rule 7(a)(2) further provides that ``cash'' 
transactions are ex-dividend or ex-rights on the day following the 
record date. Finally, Rule 7(a)(3) provides that the Committee on 
Exchange Procedure may direct that transactions be ex-dividend or ex-
rights on a day other than that fixed by this Rule.
    Rule 7(b) currently provides that transactions in securities which 
have subscription warrants attached, except those made for ``cash,'' 
will be ex-warrants on the business day preceding the date of 
expiration of the warrants, with certain exceptions. First, as provided 
in Rule 7(b)(1), when the day of expiration occurs on a holiday or 
Sunday, such transactions will be ex-warrants on the second full 
business day preceding the day of expiration. Rule 7(b)(2) further 
provides that ``cash'' transactions are ex-warrants on the day 
following the record date. Finally, Rule 7(b)(c) provides that, 
notwithstanding the provisions of Rule 7(b) and subparagraphs (1) and 
(2) thereunder, the Committee on Exchange Procedure may direct 
otherwise in any specific case.
Proposed Rule Change
    To conform Rule 7.8A and Article 9, Rule 7 with the amendments to 
Rule 15c6-1(a) of the Act adopted by the Commission, the Exchange 
proposes the following changes:
     The Exchange proposes to amend Rule 7.8A to eliminate Next 
Day as a ``non-regular way'' settlement option in light of the 
amendments to Rule 15c6-1(a), because under a T+1 settlement cycle, 
next day settlement would be considered standard or ``regular way'' 
settlement.
     The Exchange proposes to amend Rule 7(a) to provide that 
transactions in stocks, except as provided in the subparagraphs 
thereunder, will be ex-dividend or ex-rights on the record date, rather 
than on the business day preceding the record date.

[[Page 24058]]

     In Rule 7(a)(1), the Exchange proposes to eliminate the 
reference to a ``half-holiday'' and to amend the Rule to refer to one 
full business day preceding the record date, rather than two business 
days.
     The Exchange proposes to amend Rule 7(b) to provide that 
transactions with subscription warrants attached, except as provided in 
the subparagraphs thereunder, will be ex-warrants on the date of 
expiration of the warrants, rather than on the business day preceding 
such date.
     The Exchange proposes to amend Rule 7(b)(1) to refer to 
the first full business day preceding the expiration date, rather than 
the second business day.
Implementation
    The Exchange proposes that the operative date of this proposed rule 
change will be Tuesday, May 28, 2024, which is the compliance date 
specified in the T+1 Adopting Release, or such later date as may be 
announced by the Commission for compliance with the amendments to Rule 
15c6-1(a) set forth in the T+1 Adopting Release.\4\ The Exchange 
further proposes that, with the implementation of the T+1 settlement 
cycle and as described in the proposed changes outlined above, the ex-
dividend date for ``normal'' distributions will be the same business 
day as the record date. Accordingly, the Exchange proposes that 
Wednesday, May 29, 2024 would be the first date to which the proposed 
rules described herein would apply (i.e., the first record date to 
which the new ex-dividend date rationale will be applied). During the 
implementation of the T+1 settlement cycle, the Exchange proposes that 
the ex-dividend dates will be as follows:
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    \4\ See note 3, supra.

------------------------------------------------------------------------
                Record date                       Ex-dividend date
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May 24, 2024..............................  May 23, 2024.
May 28, 2024..............................  May 24, 2024.
May 29, 2024..............................  May 29, 2024.
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    A record date of Friday, May 24, 2024 would be a date prior to the 
effective date of the amendments to Rule 15c6-1(a) of the Act to 
shorten the standard settlement cycle for most broker-dealer 
transactions from T+2 to T+1.\5\ The rules described above would apply 
to this record date in their current form and, thus, the ``ex-dividend 
date'' would be the first business day preceding the record date or 
Thursday, May 23, 2024. Monday, May 27, 2024 is Memorial Day, which is 
an Exchange holiday; accordingly, there would be no record date on a 
holiday. A record date of Tuesday, May 28, 2024 would also fall under 
the Exchange's current rules, and the first business day preceding such 
record date would be Friday, May 24, 2024. On Wednesday, May 29, 2024, 
the proposed rules described above would apply, such that, for the 
record date of May 29, 2024, the ``ex-dividend date'' would be the same 
business day.
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    \5\ See note 3, supra.
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    The Exchange will issue a Trader Notice regarding the 
implementation of the proposed rule change and T+1 settlement cycle, 
which date would correspond with the industry-led transition to a T+1 
standard settlement, and the compliance date of the Commission's 
amendment of Rule 15c6-1(a) of the Act to require standard settlement 
no later than T+1.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\6\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\7\ in particular, because it 
is designed to prevent fraudulent and manipulative acts and practices, 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and, in general, to protect investors and the 
public interest.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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    In particular, the proposed rule change would amend the Exchange's 
rules to reflect a standard settlement cycle of T+1, in support of the 
industry-led initiative to shorten the settlement cycle to one business 
day. Moreover, the proposed rule change is consistent with the 
Commission's amendments to Rule 15c6-1(a) of the Act to require 
standard settlement no later than T+1. The Exchange believes that the 
proposed rule change would provide the regulatory certainty to 
facilitate the industry-led move to a T+1 settlement cycle. Further, 
the Exchange believes that, by shortening the time period for 
settlement of most securities transactions, the proposed rule change 
would protect investors and the public interest by reducing the number 
of unsettled trades in the clearance and settlement system at any given 
time, thereby reducing the risk inherent in settling securities 
transactions to clearing corporations, their members, and public 
investors.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed change is not 
designed to address any competitive issue, but rather to support the 
industry's transition to a T+1 regular-way settlement cycle in 
conformity with the Commission's amendment of Rule 15c6-1(a). The 
proposed change amends the Exchange's rules pertaining to securities 
settlement, which rules would apply uniformly to all contracts for the 
purchase or sale of a security (other than exempted securities) that 
provide for payment of funds and delivery of securities that occur on 
the Exchange or other self-regulatory organizations, and is intended to 
facilitate the industry-wide transition to a T+1 settlement cycle. The 
Exchange also believes that the proposed rule change will serve to 
promote clarity and consistency in its rules, thereby reducing burdens 
on the marketplace and facilitating investor protection. Accordingly, 
the Exchange believes that the proposed changes do not impose any 
burden on competition other than that necessary to implement the 
amendments to Rule 15c6-1(a) of the Act as set forth in the T+1 
Adopting Release.\8\
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    \8\ See note 3, supra.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not:
    (i) significantly affect the protection of investors or the public 
interest;
    (ii) impose any significant burden on competition; and
    (iii) become operative for 30 days from the date on which it was 
filed, or such shorter time as the Commission may designate, it has 
become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 
19b-4(f)(6) thereunder.
    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of

[[Page 24059]]

investors, or otherwise in furtherance of the purposes of the Act.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-NYSECHX-2024-14 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-NYSECHX-2024-14. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for website viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE, 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-NYSECHX-2024-14 and should 
be submitted on or before April 26, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-07222 Filed 4-4-24; 8:45 am]
BILLING CODE 8011-01-P